Colombia considers unprecedented intervention in oil pipeline tariffs

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BOGOTA (Reuters) - Colombia’s government could make an unprecedented intervention in oil pipeline tariffs, which private producers have criticized as too high, the president of the country’s National Hydrocarbons Agency (ANH) said on Wednesday.

FILE PHOTO: The logo of Colombia's National Hydrocarbons Agency (ANH), is seen in Bogota, Colombia September 26, 2019. REUTERS/Luis Jaime Acosta

Private oil companies in the Andean country have been hit hard by falling prices amid a global crisis caused by the spread of the novel coronavirus.

“The government, yes, it’s considering an intervention in tariffs,” ANH President Armando Zamora said during a virtual event for the Institute of the Americas’ La Jolla energy conference. “This is very tricky, (it) would be the first time that something like that will happen.”

In April, the ACP dismissed a pipeline costs financing offer from Ecopetrol subsidiary Cenit, saying it would just lead to higher costs later in the year.

Cenit had offered a 50% cut in tariffs for May and June and said producers could pay back the balance beginning in September.

Zamora said a tariff intervention would be legitimate but warned it would face resistance.

“There will be repercussions,” he said. “The government is preparing for litigation.”

While Zamora did not specify who might take legal action, an ANH spokesman said operators who had agreed contracts with Cenit have considered lawsuits.

Colombia’s energy ministry confirmed to Reuters it is examining how pipeline tariffs are calculated.

Zamora said the development of fracking pilots are proceeding in spite of the impact on oil prices of COVID-19, the respiratory illness caused by the novel coronavirus.

“The timetable continues, and the interest of the companies is still there,” he said.

“The interest, the preparations, the plan, the organization is so far on track for having the start of the pilot projects next year,” Zamora said.

Commercial unconventional oil and gas extraction, which is currently prohibited in Colombia, is the subject of a long-running court battle.

Pilot projects have been allowed to move ahead while the country’s highest administrative court hears weighs the case.

The Council of State court had been expected to make a decision on whether or not to allow the development of unconventional energy projects during the first half of this year.

However, a spokesman for the court said the case’s timeline had been paused amidst the pandemic.